NCPA - National Center for Policy Analysis

IRS Has Grown Nonchalant Over Tax Collections, Report Says

June 26, 2002

The Internal Revenue Service's tax-collection efforts became seriously lax during the past few years, according to a new report from the General Accounting Office. The result may be a decline in voluntary compliance by taxpayers who may have concluded that the IRS won't catch them.

  • The agency didn't even try to seek payment from 1.3 million taxpayers who owed an estimated $16 billion.
  • By 2001, the IRS was deferring collection action on about one in three new delinquency cases.
  • The report identified "large and pervasive" drops in activity in a wide range of compliance-related programs -- including audits, document matching and collections.
  • The report noted that the number of people who don't file returns seems to have increased about three-and-one-half times faster than the tax-filing population as a whole -- representing a 34 percent increase in the workload for the IRS division that tracks nonfilers between 1996 and 2001.

IRS Commissioner Charles Rossotti says that while staff time for collections did decline, the amount of money collected had actually gone down much less because the agency decided to focus on the cases that were most likely to produce results.

Source: John A. McKinnon, "IRS Grows Lax in Tax Collections, a Report Shows," Wall Street Journal, June 26, 2002; based on "Tax Administration: Impact of Compliance and Collection Program Declines on Taxpayers, GAO-02-674, May 22. 2002, General Accounting Office.

For GAO report


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